How to Tackle & Survive Retail's Perfect Storm

Following on from his last piece, Paul Fennemore, c-suite-level digital transformation and customer experience consultant, Sitecore, explains that in recent times, there has been a lot of scaremongering in the retail sector. Experts have predicted the impending death of the high street, as traditional brands lose the fight against their online counterparts.

However, recent figures suggest that only one in every five pounds spent in UK shops is online, so although there is a definite shift taking place, the majority of consumer spending still happens in-store. As a result, in-store shopping must still play a central role in customer experience; and brands need to create a seamless omnichannel journey, which spans both online and in store.

In my previous piece, I discussed the technological and social changes that are working together to cause a shift in consumer behaviour and lead the high street to struggle, including the march of technology, the move to subscription models, and the decline of brand loyalty.

This piece, however, will discuss how brands can tackle these challenges, the key strategies they can use to move their customers beyond the transaction to create real affinity, and how they can change their business models to meet the needs of the modern marketplace.

The journey to subscription-based models

The UK is a nation of subscribers; and the subscription service market is growing strongly, with nearly half of the 3,500 subscription services available today having launched in the last year. A recent report showed that 4-in-5 people, or 40 million adults, have at least one subscription service. And the trend looks set to last, with over a quarter of them thinking they will be using even more services in five years’ time. According to recent research, this year’s most popular U.S. subscription sites include Amazon Subscribe & Save, Dollar Shave Club, Ipsy, Blue Apron, and Birchbox.

To succeed in this so-called ‘subscription economy’, businesses need to shift their focus from products to customers, and use data provided by customers who sign up for subscriptions, from name and age, to location and personal preferences, in order to add context to interactions. As a result, brands will be empowered to offer a more personalised service and potentially have greater success in upselling other products and services.

The focus on experiences

This increased focus on experience over products should not end with subscription services. According to a recent study, more than 3-in-4 millennials (78%) choose to spend money on an experience or event over buying a physical item; and where appropriate, brands may benefit from moving their offering to meet this preference.

There are many examples of brands that have successfully transformed products into experiences. For example, the Cadbury confectionary brand, now owned by Mondelez International, but originally established in Birmingham, opened its doors to Cadbury World in 1990 and has grown to become a world-famous visitor attraction with plans to expand in other countries. Similarly, Ferrari World in Abu Dhabi is the first Ferrari-branded theme park and has the record for the largest space frame structure ever built.

These are some of the largest scale examples, but this focus on experiences is evident across many brands on a smaller level. For example, in 2017, frozen food brand McCain’s created a ‘Roasterant’ to celebrate the diversity of the roast dinner and offer people their choice from a pick-and-mix-style menu, offering the customer a novel and engaging experience at the same time as promoting its own roast potatoes.

The modern sales pitch is no longer a hard sell

As McCain’s has proven, surprising and delighting the customer above and beyond a simple product is now the focus of the retail game. As customers come to expect more, brands are increasingly understanding the importance of making investments into supporting, informing, and entertaining customers through their marketing efforts, rather than simply trying to sell and advertise to them.

Outside of the type of experiences explored previously, brands can do this through maintaining customer support beyond the point of sale. For example, Casper, the online mattress company, offers product guides, reviews, a blog about everything sleep related, and even a chatbot for insomniacs. These things ensure the brand shows it cares about the customer, and their experience of the product, long after they have invested in the mattress. It positions them as a brand that has time to invest in quality, valuable, and entertaining content at every point on the customer journey, making the customer feel important and, potentially, fostering a loyalty that may not have existed otherwise.

Another brand putting customer experience at the heart of their business is Thread. They ask the customer to choose styles they like based on photos of outfits, size preferences, favourite brands, and current wardrobe selection to provide personalised suggestions, offering style tips for their age. They even offer customers an individual stylist that sends handpicked items, all through the power of AI.

The move from multichannel to omnichannel

According to a report from BigCommerce, which showcases how UK consumers shop by generation, Gen Z is moving towards complete comfort with e-commerce, engaging with more ads and completing purchasing within newer and more varied platforms, such as Instagram and Snapchat. And while they do shop in-store less than other generations, over half of Gen-Z still make regular purchases on the high street. What is important to note is that this in-store shopping is part of an omnichannel journey, and is informed by online research, with nearly a quarter of Gen-Z shoppers visiting at least one of a brand’s social channels before making an in-store purchase.

With Gen-Z expecting to surpass Millennials as the most populous generation in 2019, it is important for brands to focus on perfecting the omnichannel experience that younger shoppers favour. This means moving away from multichannel, where physical and online stores are isolated and siloed, with separate stock or return policies, and instead providing customers with one unified experience online, on mobile, through social channels, and in store.

To do this, brands must ensure that they have a joined-up approach to data – if the large amount of data collected about customers from their usually weekly order, clothes size, or local store, is stored separately, brands will unable to build a comprehensive view of an individual, and may fail to offer a truly personalised, contextual experience.

The reality is that instead of brands with a high street presence being doomed to fail, they are seeing shopping habits and expectations for customer experience changing, and must adapt to thrive, rather than simply accepting that their traditional model is no longer working. Very few new retailers today are successfully executing on all their omnichannel initiatives, but it must become a priority in order to ensure they can survive the so-called ‘consumer apocalypse’.